IC85 - Reinsurance Management Exam - 7

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Q 1. According to Dr. F.L. Tuma, what is the function of reinsurance compared to a shock absorber?

Reinsurance reduces material losses

Reinsurance makes the road smoother

Reinsurance absorbs road jerks

Reinsurance reduces the volume of business

Reinsurance limits the insurer's flexibility
 
Q 2. Which statement is true regarding treaty reinsurance?

The reinsurer may decline risks falling within the scope of the agreements

Treaty reinsurance requires a review of individual risks by the reinsurer

Treaty reinsurance involves high administrative costs

Treaty wordings are standardized globally

Treaty reinsurance typically requires separate data maintenance for each placement.
 
Q 3. In a treaty document, what does the term "line" refer to?

The text of the treaty document.

The signature lines for the parties involved.

The amount was ceded to a surplus treaty.

The type of reinsurance used in the treaty.

The method of cession.
 
Q 4. In certain classes of insurance business, what is the "ORC" in reinsurance?

Original Risk Calculation

Outstanding Reinsurance Commission

Overriding Rate Commission

Original Net Rate Commission

Operational Risk Commission
 
Q 5. What is a quota share treaty in reinsurance?

An agreement where the reinsurer retains all risks written by the ceding insurer.

A reinsurance agreement that requires negotiation for each risk.

A treaty that commences only after the original insurer accepts a risk.

An agreement where the reinsurer shares a fixed percentage of every risk written by the ceding insurer.

A surplus treaty with a delay in its operation.
 
Q 6. Which of the following is NOT included in the calculation of claims' costs for determining the ultimate net loss in non-proportional reinsurance?

Salvage costs

Assessor's fees

Legal costs and interest

Salaries of employees

Survey reports
 
Q 7. What is the primary reason for late reporting of claims in reinsurance?

Administrative problems of the reinsurer

Administrative problems of the reinsured

Increased court awards

Catastrophic events

High deductibles
 
Q 8. In the context of the "losses occurring" basis, what is the responsibility of the reinsurer regarding claims that occurred during the contract period?

The reinsurer is not liable for any losses.

The reinsurer is liable only for claims known by the insurer at the date of termination.

The reinsurer is liable for all losses, even if they have not yet been settled.

The reinsurer is only liable for losses occurring before the inception date of the present contract.

The reinsurer is responsible for checking all claims against the original policy issuance date.
 
Q 9. What role does the Reinsurance Manager play in terms of corporate liquidity?

Setting cash loss limits for clients

Making investment decisions

Balancing the investment portfolio

Deciding optimal retention levels

Managing stock market investments
 
Q 10. Which risk factors are typically considered when designing a schedule of retentions in property insurance?

Premium amounts

Insured's credit score

Process carried on

Policy issuance dates

Weather conditions
 
Q 11. What is the maximum liability for the second surplus treaty in reinsurance determined?

The underwriting data

The record of large losses

The limit of cover provided

Reference to the premium ceded under the treaty

The reinsurer's willingness to negotiate rates
 
Q 12. What are the two distinct classes of loss exposures in marine - Cargo reinsurance?

Total loss and common loss

Common loss and general average loss

General average loss and particular average loss

Partial loss and special loss

Aggregate loss and excess loss
 
Q 13. What is the primary objective of quota-share and surplus treaties in fire reinsurance?

To increase the volatility of the gross direct business

To provide substantial recovery in case of higher-than-average fire losses

To reduce the effectiveness of working and catastrophe excess of loss covers

To iron out the variation in results that occur from year to year

To maximize the gross underwriting result
 
Q 14. In marine cargo insurance, what is an important feature of policies due to the accumulation of liability?

High premiums

Clustering of risks per vessel

Large individual policy amounts

Air transit coverage

Lack of voyage register
 
Q 15. How is per-risk retention typically scaled down?

By increasing the quality of risks

According to government regulations

By using clearly defined formulas

Based on the underwriter's personal preferences

According to the financial consequences of risks



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